Douyu, a Chinese live streaming service focused on video games, has filed with the U.S.

Wuhan-based Douyu, whose name translates as "fighting fish", is the second largest stock exchange in the world, Twitch -like service backed by Tencent to go public in the United States. Its direct competitor Huya, who has a similarly fierce name "tiger's teeth" and also counts Tencent as a major investor, raised $ 1

80 million from his NYSE listing last May

It is not surprising for Tencent to hedge his bets in esports streaming, given the giant relies heavily on video games to make money. For example, Tencent can use some of its portfolio's advertising slots to get the word out about its new releases. Indeed, Douyu's filing shows he received a 27.48 million yuan ($ 4.09 million) in advertising fees from Tencent last year

"Tencent may devote resources or attention to other companies it has an interest in, including our direct or indirect competitors. As a result, we may not fully realize the benefits we expect from strategic cooperation with Tencent. Failure to realize the intended benefits of strategic cooperation with Tencent, or potential restrictions on our collaboration with other parties, could materially and adversely affect our business and the results of operations. "

But there are nuances in the giant's ties to China's top two live streaming services that could mean more affinity between Tencent and Douyu. The social media and gaming behemoth is currently Douyu's largest shareholder with a 40.1 percent stake owned through its wholly-owned subsidiary Nectarine. Over at Huya, Tencent is the second-largest stakeholder behind YY, the pioneer in China's live streaming sector that had spun off Huya.

When it comes to financial terms, the rivaling pair is in a head-on race. In 2018, Douyu doubled its net revenue to $ 531.5 million. Huya held an edge as it earned $ 678.3 million in the same period, also doubling the amount from a year ago.

Huya may have learned a few things about monetizing live streaming from 14-year-old YY as it managed to pull in more revenue despite owning a smaller user base. Douyu claimed 153.5 million monthly active users in the fourth quarter compared to 134.4 million in the year-earlier period. Huya clocked in 116.6 million MAUs in the fourth quarter, up from 86.7 million a year ago.

How the two make money also diverge slightly. In the fourth quarter, 86 percent of Douyu's revenue originated from virtual items that users tipped to their favorite streaming hosts, with remaining earnings derived from advertising and more. By contrast, Huya relied almost exclusively on live streaming gifts, which made up 95.3 percent of total revenue.

Screenshot of Douyu live streaming session

As Douyu grows his coffers to spend on content as well technologies following the imminent IPO, China's live streaming landscape is set to warm up. Just earlier this month, Huya raised $ 327 million in a secondary offering to invest in content and R & D. Like many other businesses anchored in content, Huya and Douyu depend tremendously on quality creators to keep users loyal. Both have offered sizable checks to live streaming hosts, promising to grow internet celebrities into bigger stars

And they've extended the battlefield outside China as emerging media forms, most exemplified by short video services Douyin (TikTok's China version) and Kuaishou, threaten to steal people's eyeball time away. Both bite-size video apps now enjoy a much larger user base than their live streaming counterparts

"We intend to further explore the overseas markets by expanding our user base through both organic expansion and selective investments," noted Douyu in his IPO filing

In a similar move, Huya's overseas expansion is also well underway. "In addition to our vigorous domestic growth, we have successfully leveraged our unique business model into new overseas markets. We believe we are delivering long-term value through strategic investments in overseas markets in 2019 and beyond, "said Huya chief executive Rongjie Dong in the company's Q4 earnings report